“ONDC will propel Indian e-commerce from 80 million monthly users to 500 million. It will create a new class of e-commerce users. Suddenly, people who didn’t think of e-commerce earlier will start thinking of it for convenience and order from their neighbourhood stores via ONDC.” – Nandan Nilekani
Considered the world’s first inclusive large-scale e-commerce system and backed by the Government of India, ONDC has established the exceptional prospect to raise e‑retail penetration from the prevailing 4.3% to its highest potential in India. What is ONDC? ONDC stands for Open Network for Digital Commerce. It is a tech-based program for revolutionizing the way in which eCommerce operates in the country by leveraging it through an open protocol depending on open-source specs.
So far, ONDC is present across 620 cities. It plans to increase its market share to 25 per cent across the country from the current eight per cent. Moving forward, it plans to launch mobility services in four more cities across India.
What is ONDC?
Open Network for Digital Commerce (ONDC) is a private non-profit Section 8 company established by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India to develop open e-commerce.
As a transforming technology initiative, it seeks to change the face of India’s digital commerce ecosystem. Currently, consumers and businesspeople in the eCommerce marketplace are facing issues such as multiple delivery applications, monopolistic practices, and user suitability. ONDC is born with the aim of addressing these challenges through an open and fair digital commerce network, increasing competition and empowering consumers with ease of use.
Salient Features of ONDC
- Operates as a single open network for buyers/sellers
- Enhanced digital visibility and access to buyers and sellers
- Creation of a credit history by saving data
- Brings together the network of buyers and sellers
- Centralized platform for comparing prices, exploring options, and placing orders
- Empowers neighbourhood businesses
- Emphasis on data empowerment and privacy
- Prevents digital monopolies and offers an appealing customer value proposition
- Generates employment opportunities and stimulates local economies
Challenges Faced by ONDC
- Complex mechanism as compared to other digital initiatives
- Rise in disputes because of offline usage and delivery of products
- Onboarding sellers of different sophistication levels
Who Are the Stakeholders in the Entire ONDC Network?
Different stakeholders play a significant role in the ONDC operations; here are they:
- Buyer Apps – Applications that will interrelate with the buyers, i.e., the demand side of any transaction, where the transaction starts on the ONDC network. E.g., Paytm, MagicPin etc.
- Seller Apps – Applications that connect with thousands of eCommerce sellers. E.g., Mystore, SellerApp etc.
- Channel Connecting Buyers to ONDC Network – Searching and placing orders through an intermediate
- Channel Connecting Sellers to ONDC Network – Creating business listings and processing orders through an intermediate
- Getaway – A connecting channel for fulfilling queries and results based on search queries
An Interesting Read: OmniCard collaborates with ONDC as the first fintech to issue corporate gift cards
How is ONDC Transforming FinTech?
The new digital initiative on the block ONDC has been empowering newer opportunities in the areas of FinTech services and products. This has enabled organizations to increase their customer reach and offer them cutting-edge solutions. Here is how ONDC has been revolutionizing the sector:
- Commerce Apps Embracing Digitization
The commerce industry is one big area in which digital initiatives can prove their worth. There are an equal number of challenges as compared to the benefits that it offers, such as payment solutions and onboarding. ONDC is one good initiative that has helped commerce apps to encounter smooth implementation across multiple platforms and serve as a fruitful tech initiative. Digital applications can encourage commerce-related activities for their clients, increasing revenue through ONDC-enabled commerce marketplaces.
- Seller Apps Connecting Well with Financial Institutions
Different financial service contributors, with the help of seller apps through ONDC, can reach out to a range of customers through enhanced products and insurance items. There could be newer opportunities for financial institutes and banks that could lead them to expand their customer base. Leveraging the open network data, these organizations could offer customized solutions, promoting digital commerce and engrave it in a range of financial services.
- Widespread Online Payment Mechanism
ONDC has ensured a significant rise in the usage of online payments, with the number of daily retail transactions growing multi-fold. From a few hundred to a few thousand per day – that is the vital jump that online payment portals have witnessed over the last few months. With so many portals increasing by the day, ONDC has ensured its presence and acceptance across 85 cities in India.
- SMBs Enjoying the Fruits of ONDC
Small and medium businesses have been able to explore the potential of ONDC largely by getting involved in the digital revolution. Till now, the exposure of SMEs to e-commerce platforms has been limited. ONDC ensured a wide spread of technology to the business segments and that is where a greater number of SMEs have now gone in for a digital advancement.
- Multichannel Shopping Experience
ONDC has added a feather to its cap by changing the entire shopping experience. Since it now includes SMEs and startups, customers can enjoy a true multichannel experience. Through ONDC, users and search for products in physical stores and make instant purchases with due payment options and discounts. ONDC is reaching out to an increasing number of consumers, business units, users, and SMEs with enhanced fintech achievements, social eCommerce, advanced online payments and more.
As We Wrap Up
Wasn’t this an interesting explanation of one of the most appealing digital initiatives in India? It will be worthwhile to keep watching how ONDC establishes its presence in India and, soon, around the world.
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